The State of New Construction

THE STATE OF NEW CONSTRUCTION

Executive Summary

From the salty environs of Maryland’s Eastern Shore to the rolling hills of Virginia Hunt Country, the Mid-Atlantic has long occupied a singular place in the American landscape. It is a region defined not only by beauty, but by balance — where historic towns and working waterfronts coexist with global institutions, vibrant cultural centers, and enduring traditions of craftsmanship.

Anchored by a dynamic employment base, a nationally respected mix of public and private schools, and an unparalleled position along the Eastern Seaboard, the Mid-Atlantic continues to attract those seeking both opportunity and permanence. For many, it is not simply a place to live, but a place to invest — thoughtfully, intentionally, and for the long term.

So, whether you are considering the creation of an architecturally designed home or you are a design professional looking to deepen your understanding of today’s high-end construction market, we invite you to explore our 2025 State of New Construction report.

What follows is a closer look at how land, design, and execution are shaping the future of residential construction at the highest levels of the market.

In this annual report, we examine the Mid-Atlantic’s architecturally designed new home market. Using first party sales data, we use data driven insights and curation to isolate the market for architecturally designed homes where land economics, design quality, and execution materially shape outcomes.

As you will see, what emerges is a clear picture of how value is being created (and constrained) across distinct locales, and how interior designers, residential architects, custom home builders, and landscape architects can adapt their strategies accordingly to capture this valuable customer base.

Core Metrics and Methodology

The analysis in the 2025 State of New Construction is grounded in a small set of highly revealing metrics.

First, we analyze the total sale price of each property, which presents an aggregate of transaction volume in each core sub-market.

Next, we look at the average price per finished square foot, a critical efficiency measure calculated by dividing total sale price by total finished square footage (including both above- and below-grade space).

As a proxy for land value premium and to assess the relative weight of land versus construction cost, we also look carefully at price per developed acre by sale price by acreage.

And finally, as measure of market depth, liquidity, and sustained demand, we take a look at total transaction volume.

To add additional value to design professionals, we also leverage data from the National Association of Home Builders (NAHB) Cost of Construction Survey. Using this data, we achieve a floor price for new home construction and a useful filter that allows us to focus on transactions that align more closely with architecturally designed homes.

Together, these metrics allow for a comparative view of how land scarcity, construction quality, and market velocity interact across our sample markets to obtain a clear picture for the Mid-Atlantic region at large.

Strategic Market Profiles

The data in the 2025 State of New Construction reveals three distinct market archetypes, each driven by a different set of economic pressures.

First, the the urban and close-in suburban markets, such as Washington, D.C., Bethesda, Maryland, and Chevy Chase, Maryland, where land scarcity is the defining constraint, resulting in high land prices and little margin for inefficiency.

For the design professional navigating these maximum density markets, success depends on extracting maximum utility from limited parcels. Residential architects, interior designers, and custom home builders must prioritize total finished square footage, often extending value below grade through high-quality, fully finished basements while landscape architects must prioritize refined, high-impact solutions such as vertical gardens, integrated hardscaping, and outdoor rooms designed to perform on minimal footprints. Here, every square foot must justify its existence.

In markets like Coastal Delaware, particularly the desirable enclaves of Rehoboth Beach, Delaware, Bethany Beach, Delaware, and Fenwick Island, Delaware — where the average price per developed acre reaches as high as $28.59 Million — land cost overwhelmingly dictates project economics. In this unique market, design decisions must align with and elevate the intrinsic value of the site through maximization of water views, coastal resilience, material durability, and architectural presence. The land sets the budget, and the home must rise to meet it.

And finally, in powerhouse markets like Bethesda, Maryland and McLean, Virginia, which comprise 28% of all transaction volume in our sample while also commanding some of the highest average total finished price per square foot figures (at $513.02 and $457.37 respectively), a pronounced willingness to pay for construction quality, design integrity, and premium finishes is clear.

A Comparison to Local and National Benchmarks

The transactions analyzed within this report, which boast an average sale price of over $2.45 Million, demand a specialized approach to project economics.

While your data does not include detailed cost breakdowns, we can use the NAHB's national ratios as well as data from new construction and resale transactions to infer the scale of costs you are likely seeing, highlighting where your costs likely diverge the most.

For instance, in the National Association of Home Builder’s (NAHB) Cost of Construction Survey, the largest share of the sales price of a new construction home (a commanding 64.4%) is attributable to direct construction costs, which translates to an estimated $1.58 Million for the average home in our dataset. This figure underscores a critical truth for design professionals: your design and execution choices directly dictate the dominant component of project feasibility and profit.

Another example includes finished lot costs, which account for 13.7% of the sales price (or approximately $336,074 for the average property in our data set). For the architecturally-designed homes in our report, finished lot cost share is substantially higher than the national average, potentially being the most significant driver of the total price premium and highlighting the importance of site planning and efficient land use to maximize the return on investment for the end user.

Builder profit, a national average of 11.0% (or an estimated $269,840 when applied to our data), is a vital target. Preserving and growing this margin is directly correlated with excellence in cost management and the ability to deliver differentiated value that justifies the high price.

The remaining 10.9% (approximately $267,387 when applied to our data) is allocated to “other costs” that correlate to overhead, sales commissions, and marketing the new home.

For a boutique design professional, the approach to analyzing "other costs" must shift from a percentage of a final sales price to a more precise Cost of Doing Business or Overhead Model which are effectively tied to the cost of running your business over a period of time.

When applying the same filters to resale transactions in the Mid-Atlantic, we find an average sale price of $1.40 Million. While significantly higher than the NAHB average sale price of $665,298, we find a roughly 75% premium in when considering our new construction data set,

For the design professional, these benchmarks offer several key insights for navigating the new construction market.

Key Takeaways for Design Professionals

Across our sample markets, one theme is consistent: architecturally designed new construction is no longer defined solely by size or price, but by how intelligently land, design, and execution are aligned.

Further, boutique design professionals seeking to grow their opportunity set with these coveted end users must master managing the client relationship, capitalizing on personalization, and mitigating the complexities of a long-term project.

Managing the Client Relationship

First, unlike a spec home where the end user does not necessarily make all the choices, your role within the context of a custom home or renovation is to guide the client's decisions, not to make them. Develop a process that presents a limited, curated set of premium options at each stage (e.g., three best marble options, two optimal appliance packages) to give them control without causing "decision fatigue."

Next, use design to reflect the client’s unique lifestyle, family, and future. Spec homes are designed to appeal to everyone; a custom home must appeal profoundly to only one buyer. This is where your deep, qualitative client interviews become essential, translating their life into floor plans and finishes.

Finally, understand the client is paying a premium for what a spec home lacks. Focus on features that are impossible in a typical renovation or spec build, such as custom-milled cabinetry, unique room functions (e.g., an indoor sports court, a full-scale art studio), and complex structural elements that maximize views or light.

Managing Timeline and Cost Expectations

The greatest drawbacks of a custom build are the longer timeline and higher costs. Your lesson is to establish trust and transparency to manage these realities.

First, it’s important to clearly define the project in phases: Discovery, Schematic Design, Design Development, Construction Documentation, and Construction. Present this to the client upfront so they understand the 9-to-18-month (or longer) commitment.

Next, establish a robust Change Order protocol. Customization often leads to changes, and changes lead to cost overruns and delays. Implement a strict, clear system for change requests that outlines the cost and schedule impact of every deviation before it is approved. This protects your budget and your relationship.

And finally, position yourself as a partner in value engineering. Because custom homes are more expensive, you must act as the steward of their budget. Know where to spend for maximum impact and where to save without sacrificing quality.

Deepening the Relationship Dynamic

The relationship between client and design professional is far more intertwined than a spec developer relationship. You are their partner, not just a service provider.

First, communicate constantly and clearly. Over-communicate on progress, hurdles, and milestones. Remember the client is often deeply engaged in the project and needs to feel informed and respected for their significant time and energy commitment.

Next, connect them with the right team. Your success hinges on the quality of your network. Be ready to refer trusted partners and specialists such as civil engineers and high-end subcontractors (i.e, home automation specialists, millwork artisans, etc.) who can deliver on the client's complex vision and maintain the high level of quality that justifies the price.

And finally, focus on craftsmanship over volume. Unlike a spec developer who seeks economies of scale, your boutique business thrives on reputation and the quality of the final product. Every detail matters, as the client will be living with the result for years and their referral is your most valuable marketing tool.

In conclusion, the most successful projects respond directly to their local cost drivers, whether that means maximizing density, honoring irreplaceable land, or delivering construction quality that buyers demonstrably value.

For design professionals operating at the top of the market, understanding these dynamics is no longer optional. It is the foundation of durable success.

For custom home builders, interior designers, and landscape architects, position yourself as someone who can maximize construction budgets without over-designing or under specifying, particularly when operating in a premium markets where margin can quickly erode if expectations are not set adequately.

For residential architects, communicate your ability to navigate high stakes projects where land value in high density and coastal or waterfront markets require risk mitigation and compliance with local ordinances.